Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, but lasts much longer than the other. Gateway's discount rate is 9%. It plans to continue with one of the two models for the foreseeable future. Based on the equivalent annual costs of each, shown below, which should it choose? [Note: I have tried to make it easier for you to solve this problem. You do not need to do extra, unnecessary calculations merely to show me your work.] Model Year 0 $0 $0 Year 1 -$23 -$21 Year 2 Year 3 Year 4 -$23 -$21 Year 5 Year 6 Old R S &S -$23 -$21 -$23 -$21 -$23 -$23 Which bus should Gateway Tours choose? Give me the name of the bus that should be chosen, and the final numbers that justify your answer. Do not explain any concepts - I'm looking for an answer along the lines of "Choose because $ is better than $ [I'm sorry if the columns don't line up perfectly. Old R. is a 6 year project, and S&S is a 4 year project.] B I S I X, Insert Formula
Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, but lasts much longer than the other. Gateway's discount rate is 9%. It plans to continue with one of the two models for the foreseeable future. Based on the equivalent annual costs of each, shown below, which should it choose? [Note: I have tried to make it easier for you to solve this problem. You do not need to do extra, unnecessary calculations merely to show me your work.] Model Year 0 $0 $0 Year 1 -$23 -$21 Year 2 Year 3 Year 4 -$23 -$21 Year 5 Year 6 Old R S &S -$23 -$21 -$23 -$21 -$23 -$23 Which bus should Gateway Tours choose? Give me the name of the bus that should be chosen, and the final numbers that justify your answer. Do not explain any concepts - I'm looking for an answer along the lines of "Choose because $ is better than $ [I'm sorry if the columns don't line up perfectly. Old R. is a 6 year project, and S&S is a 4 year project.] B I S I X, Insert Formula
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, but lasts much longer than the other. Gateway's discount rate
is 9%. It plans to continue with one of the two models for the foreseeable future. Based on the equivalent annual costs of each, shown below, which should it choose?
[Note: I have tried to make it easier for you to solve this problem. You do not need to do extra, unnecessary calculations merely to show me your work.]
Model
Year 0
Year 1
Year 2
Year 3
-$23
-$21
Year 4
Year 5
Year 6
Old R
S &S
$0
-$23
-$21
-$23
-$21
-$23
-$21
-$23
-$23
$0
Which bus should Gateway Tours choose?
Give me the name of the bus that should be chosen, and the final numbers that justify your answer. Do not explain any concepts - I'm looking for an answer along the
lines of "Choose
because $
is better than $
[I'm sorry if the columns don't line up perfectly. Old R. is a 6 year project, and S&S is a 4 year project.]
B
I
X,
Insert Formula](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0d419537-f78c-48db-8350-6caeb26536e2%2F90cfe221-4f94-4db7-b0b5-1c16c29af618%2Faw1yk2t_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, but lasts much longer than the other. Gateway's discount rate
is 9%. It plans to continue with one of the two models for the foreseeable future. Based on the equivalent annual costs of each, shown below, which should it choose?
[Note: I have tried to make it easier for you to solve this problem. You do not need to do extra, unnecessary calculations merely to show me your work.]
Model
Year 0
Year 1
Year 2
Year 3
-$23
-$21
Year 4
Year 5
Year 6
Old R
S &S
$0
-$23
-$21
-$23
-$21
-$23
-$21
-$23
-$23
$0
Which bus should Gateway Tours choose?
Give me the name of the bus that should be chosen, and the final numbers that justify your answer. Do not explain any concepts - I'm looking for an answer along the
lines of "Choose
because $
is better than $
[I'm sorry if the columns don't line up perfectly. Old R. is a 6 year project, and S&S is a 4 year project.]
B
I
X,
Insert Formula
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